Magazine article American Banker

South Financial: CEO Departure No Cause for Alarm

Magazine article American Banker

South Financial: CEO Departure No Cause for Alarm

Article excerpt

Byline: Katie Kuehner-Hebert

South Financial Group Inc.'s chief financial officer said Mack Whittle's decision to retire as chief executive by yearend should not be interpreted by investors as a sign the Greenville, S.C., company is poised to deliver bad news.

The CFO, James Gordon, said Tuesday's announcement was not triggered by any single event or adverse change to the company's operation but was the "culmination of discussions" over the past six months between Mr. Whittle and the board about his desire to retire ahead of the company's mandatory retirement age of 72. Mr. Whittle, who is 59, founded South Financial in 1986.

The company said Mr. Whittle was unavailable for an interview Wednesday.

Because his retirement had not been widely anticipated, there was some speculation Wednesday about the $13.9 billion-asset South Financial, which suffered heavy losses on bad residential construction loans in Florida.

Robert Patten, an analyst with Regions Financial Corp.'s Morgan Keegan & Co. Inc., said Mr. Whittle's departure may indicate that more pain is on the way for South Financial, which reported a $201.3 million first-quarter loss and a $16.8 million net loss last quarter, both because of credit-quality deterioration. In May it raised $239 million in a convertible preferred stock offering in a bid to boost capital levels.

The company did not have a succession plan in place and said its board has appointed a committee to oversee a nationwide search for Mr. Whittle's successor.

"I can't remember a founder and a CEO of a small bank leaving suddenly like this without bad news following," Mr. Patten said.

Asked about the timing Wednesday, Mr. Gordon said, "I don't think there's a perfect timing for any of these things, but the board felt that it was better to go ahead and put in place a plan now for Mack to leave the company so that we can openly search for a new CEO. …

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